Business and Real Estate Recovery Part 3

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As counties change phases and the governors periodically update the social distancing rules, we’ve all become accustomed to looking for updates before planning an event.  This article provides some of the newest, most relevant COVID-19 updates from the past few weeks.

Clark County Business Relief Grant

Clark County has $8.1 million to give to local businesses and nonprofits with up to 100 employees.   Each business may receive up to $30,000. Applications are now being accepted.

Ridgefield Utility Grants.

The City of Ridgefield is offering temporary emergency utility relief to residential customers who lost their job or noticed a significant reduction in their income due to COVID-19.  The City may waive past due balances up to $500. Eligibility requirements and application process available online here.

PPP, EIDL, Unemployment, and Business Taxes

Changes continue to be made to the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) guidance.  Recent guidance about PPP loan forgiveness suggests that most businesses will qualify for 100% loan forgiveness.  HOWEVER, the IRS has said any business expense paid with PPP loan proceeds will not be tax deductible.  This means businesses will not be able to take deductions for anything paid off with PPP loan funds.  Effectively, this makes PPP loan proceeds taxable income.  While the details are still being negotiated, we recommend businesses plan and prepare for their PPP loans to be taxable.  Keep this in mind, too, when making your quarterly estimated tax payments.

EIDL loan proceeds are not taxable, but the amount of the EIDL loan that qualifies as a grant (up to $10,000) likely WILL be considered taxable income.  We’re still waiting on more guidance from the IRS on this.

Unemployment benefits are taxable income.  If income taxes were not withdrawn from you unemployment check, you may want to make estimated quarterly tax payments to avoid a big tax bill at the end of the year.

Pandemic-Related Litigation

Business Limitations – In late August 2020, Il Bacco Restaurant Corp. and more than 300 restaurants sued Governor Andrew M. Cuomo and Mayor Bill de Blasio, alleging their executive orders curtailing New York City restaurant operations unfairly prohibited them from conducting business by prohibiting indoor dining and limiting seating.  The lawsuit claims more than $2 billion dollars in damages and an injunction prohibiting the executive orders from being enforced.  The case is notable because Il Bacco is located in Queens, approximately 500 feet from the edge of Nassau County.  Nassau County never barred indoor dining.  The court has not yet entered any decisions in the case.

Residential Eviction Ban – In July, two residential landlords, filed suit against the Commonwealth of Massachusetts, claiming the statewide eviction moratorium is unconstitutional.  In late September, the court, in Baptiste et al v. Commonwealth of Massachusetts, et al. , held that plaintiffs were not entitled to a preliminary injunction on four of their claims ((1) alleged violation of the Contracts Clause; (2) unjust taking of property without compensation; (3) denial of the right to petition the courts; and (4) First Amendment violations), because the plaintiffs had not shown they were likely to succeed on these.  The court granted plaintiffs’ request to prohibit the state from requiring landlords to notify tenants who were behind in paying their rent of the names and contact information for groups that support tenants in fighting evictions.

In late August 2020, Il Bacco Restaurant Corp. (“IL Bacco”) filed a class action civil rights lawsuit against Governor Andrew M. Cuomo (“Gov. Cuomo”) and Mayor Bill de Blasio, challenging executive orders curtailing New York City restaurant operations since March 2020. The lawsuit includes over 300 restaurants standing with IL Bacco, alleging that the shutdown orders have unfairly prohibited them from conducting barring indoor dining and limiting their services.   The Plaintiffs seek over $2 billion dollars in damages, as well as a declaratory judgment that the executive orders violate the restaurants’ constitutional rights, and a preliminary injunction enjoining Cuomo from enforcing the shutdown orders or issuing any further shutdowns.

CDC Eviction Moratorium – Richard Brown and others filed a lawsuit on September 19, alleging the nationwide residential eviction freeze issued by the Centers for Disease Control and Prevention (“CDC”) is unconstitutional.  The New Civil Liberties Alliance also filed a lawsuit in Georgia – where the CDC is located – on behalf of a landlord from Virginia seeking to halt or overturn the CDC’s eviction moratorium order.  We will update this blog as more information comes available.

UPDATED 2/3/21

The CDC Order does not apply in Washington and Oregon because we currently have more restrictive eviction bans.

Additional Resources

More Information

For additional information on these and other pandemic-related issues, see our COVID-19 Business and Real Estate Update blog and AWB’s Rebound and Recovery website for a lot of helpful tools and information.  Both are free for all Washington businesses.

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